Fund Times: Fairholme Raises Minimum Investment

Fairholme Raises Minimum Investment
Starting Dec. 1, new investors will need $10,000 instead of $2,500 to start regular and IRA accounts at Bruce Berkowitz's  Fairholme (FAIRX) fund. The fund's minimum for additional investments will remain $1,000.

Fairholme is imposing the new higher minimum in the wake of saying it will launch a new focused bond fund that will have a $25,000 minimum. Berkowitz prefers a higher investment minimum because it helps keep the fund's total expense ratio lower for all investors. Smaller accounts are more costly for fund firms than bigger ones.

T. Rowe Price Launching Global Infrastructure Fund
 T. Rowe Price (TROW) announced it will launch its Global Infrastructure fund in January 2010. The fund will invest in companies that are capitalizing on the infrastructure build-out of emerging economies, such as  ABB (ABB),  Siemens (SI), Komatsu, and  General Electric (GE).

Like other global infrastructure funds, it should fall into the Morningstar world-stock category. The expense ratio will be 1.10% after fee waivers, which is in line with what competitors charge. Like many other T. Rowe funds, this fund will have a 2% redemption fee if sold within 90 days of purchase.

The portfolio manager will be Susanta Mazumdar, who has been an analyst in Asia with T. Rowe Price since joining the firm in 2006. He has focused on energy and infrastructure companies. Before that, he was director of equity research at UBS India, where he started in 2000.

This new fund is in line with T. Rowe Price's main priority of global expansion with keen interest in emerging markets, says Morningstar fund analyst Harry Milling. T. Rowe recently invested in an Indian asset-management firm. The newly minted head of T. Rowe Price International is London-based Chris Alderson, who headed  T. Rowe Price Emerging Markets Stock (PRMSX) before assuming his new role this past March.

Fundamental Index Methodology Awarded Patent
Asset-management companies everywhere are trying to patent their investment techniques--for both bond and stock funds. Research Affiliates LLC, founded by Robert Arnott, is the latest to announce that the United States Patent and Trademark Office has approved a patent for the company's Research Affiliates Fundamental Index indexing methodology, which selects and weights securities using fundamental measures of company size--such as dividends, cash flow, sales, and book value--rather than market capitalization. Research Affiliates says it has granted licenses to more than 20 other firms to use the RAFI methodology to run more than $25 billion.

A current Supreme Court case over a denied patent for a financial strategy could affect the RAFI patent. The court won't rule on Bilski v. Kappos until mid-2010, but the decision may affect not only previously awarded patents, like the one issued for the RAFI strategy, but also many other pending financial patents.

For more commentary on the patent, see Morningstar vice president of research John Rekenthaler's recent blog post. 

Etc.
The board of Federated MDT Large Cap Value, a quantitative fund launched in March 2008, decided to liquidate it in December because the less than $1 million fund failed to achieve critical mass. This liquidation underscores the fact that Federated's 2006 acquisition of the MDT quant shop has yielded no notable successes yet. Federated remains committed to the endeavor, however, as it has hired two additional MDT analysts in the past six months.

Vanguard has released preliminary capital gains estimates for some of its stock and bond funds.

Bruce Bond, founder, chairman, and CEO of Invesco IVZ PowerShares, will be transitioning into the role of chairman. Ben Fulton will assume new responsibilities as managing director of global ETF business.

Jonathan Matthews will replace Raymond A. Mills as manager on  T. Rowe Price International Growth & Income (TRIGX) on July 1, 2010.

Greg Francfort is now a comanager on  Neuberger Berman Focus (NBSSX). Until now, David Levine had been the sole manager since June 2008. The fund's other manager, Bob Corman, who was also head of research, left the firm in March of this year.

PIMCO has launched its PIMCO Enhanced Short Maturity Strategy  (MINT) on the NYSE Arca. This is the industry's first actively managed bond ETF. The ETF is designed to be an alternative to traditional money market funds (see Morningstar's recent commentary here).

Satuit Capital Small Cap  will be liquidated by Dec. 15, 2009.

Munder Multi-Cap Growth  will be liquidated by Dec. 23, 2009.

Pending shareholder approval, Federated Mid Cap Growth Strategies II portfolio of the Federated Insurance Series will merge into Federated Kaufmann II portfolio of the Federated Insurance Series. Also pending shareholder approval, Federated Clover Value II portfolio of the Federated Insurance Series will merge into Federated Capital Appreciation II portfolio of the Federated Insurance Series.

Shareholders of Monteagle Large Cap Growth  are being asked to vote on a merger into Monteagle Quality Growth .

George Tharakan is no longer a portfolio manager of Nuveen Santa Barbara Growth , while Allan House and Christopher Leonard have joined the portfolio-management team of Nuveen Santa Barbara Growth Opportunities .

Stephane Arvanitis and Heather Hackett joined Paul Zemsky as comanagers of ING Global Target Payment (IGPAX).

Michael Collins joined the portfolio-management team of Dryden Total Return Bond (PDBAX).

Gregory Kaplan replaced Alan Remedios as co-portfolio manager of CNI Charter California Tax Exempt Bond .

Daniel Ling replaced David Mannheim as co-portfolio manager of PL International Large-Cap .

The board of trustees for UBS PACE Global Real Estate Investments (PREAX) replaced the fund's subadvisor, Goldman Sachs Asset Management, with ING Clarion Real Estate Securities and Brookfield Investment Management. The fund's assets will be divided between the two new subadvisors.

On Nov. 1,  Becker Value Equity (BVEFX) lowered the management fee from 1% to 0.85%. The lower expense ratio sits in the second-cheapest quintile for no-load large-cap funds and among the cheapest options for similarly sized funds.

This article was corrected to reflect mergers between portfolios within Federated Insurance Series and not among its retail shares.

Fund analysts Harry Milling and David Falkof contributed to this report.